LEASE
This Lease ("Lease") is entered into as of November 1, 1998, between
XXXXXXX X. XXXXX ("Landlord") and HERITAGE OAKS BANK, a California
corporation ("Tenant")
RECITALS
A. Landlord is the owner of certain land, building, and improvements
located in Santa Maria, California, generally described as a commercial
building located at 0000 Xxxxx Xxxxxxxx, and more particularly described in
attached Exhibit "A" ("Premises").
B. Landlord desires to lease to Tenant and Tenant desires to lease from
Landlord the Premises on the terms and conditions in this Lease.
For good and valuable consideration, the parties agree as follows:
1. DEFINITIONS. As used in this Lease the following terms shall have
the following definitions:
ADJUSTMENT DATE is defined in Section 5.b.
COMMENCEMENT DATE is defined in Section 3.
EXTENDED TERM is defined in Section 4.
EVENT OF DEFAULT is defined in Section 22.
HAZARDOUS SUBSTANCE is defined in Section 7.c.
INDEX is defined in Section 5.c.
INITIAL MONTHLY RENT is defined in Section 5.a.
LANDLORD is defined in the preamble of this Lease.
LEASE is defined in the preamble of this Lease.
MINIMUM MONTHLY RENT is defined in Section 5.a.
OPTION NOTICE is defined in Section 4.
PREMISES is defined in Recital A.
REPORTABLE USE is defined in Section 7.c.
TENANT is defined in the preamble of this Lease.
TERM is defined in Section 3.
TERMINATION DATE is defined in Section 3.
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TRADE FIXTURE is defined in Section 17.a.
2. LEASE. Landlord leases to Tenant and Tenant leases from Landlord
the Premises on the terms and conditions in this Lease.
3. TERM OF LEASE. The initial term of this Lease ("Term") shall be
for ten (10) years commencing on November 1, 1998 ("Commencement Date"), and
ending on October 31, 2008, unless sooner terminated pursuant to the terms of
this Lease ("Termination Date").
4. OPTION TO EXTEND. Tenant is given three (3) separate and
consecutive options to extend the Term on all of the provisions contained in
this Lease, except for the Minimum Monthly Rent, each for a five (5) year
period ("Extended Term") following expiration of the Initial Term or Extended
Term, by giving notice of exercise of the option ("Option Notice") to
Landlord at least six (6) months, but not more than one (1) year before the
expiration of the Term or Extended Term. Provided that if Tenant is in
default on the date of giving the Option Notice, the Option Notice shall be
totally ineffective, or if Tenant is in default on the date any Extended Term
is to commence, provided that Landlord has given Tenant prior written notice
of such default, the Extended Term shall not commence and this Lease shall
expire at the end of the Initial Term or then-current Extended Term
Tenant shall have no other right to extend the Term beyond October
31, 2023.
5. MINIMUM MONTHLY RENT.
a. For the period commencing November 1, 1998, and ending
October 31, 1999, the minimum monthly rental shall be Five Thousand Three
Hundred Ninety-Five Dollars ($5,395.00) (Initial Monthly Rent and as adjusted
from time to time, Minimum Monthly Rent). The Minimum Monthly Rent shall be
payable in advance not later than the fifth (5th) business day of each month.
The payment shall be made by electronic transfer into Landlord's account at
Bank of America, 0000 Xxxxxxx Xxxxxx, Xxx Xxxx Xxxxxx, Xxxxxxxxxx, Account
No. 00614-06469, or by electronic transfer or other method as Landlord may
from time to time designate by written notice to Tenant.
b. The Minimum Monthly Rent shall be adjusted annually as of
November 1, ("Adjustment Date") to an amount equal to the greater of
(i) the Minimum Monthly Rent in effect immediately prior to the
Adjustment Date (without regard to any temporary abatement of rental then
or previously in effect pursuant to the provisions of this Lease), or
(ii) the product obtained by multiplying the Initial Monthly Rent
(without regard to any temporary abatement of rental then or previously
in effect pursuant to the provisions of this Lease) by a fraction, the
numerator of which is the Index, as defined below, published nearest but
prior to the Adjustment Date and the denominator of which is the Index
published nearest but prior to the Commencement Date.
No adjustment shall be greater than six percent (6%) per year.
c. The term Index as used in this Lease shall mean the Consumer
Price Index (All Urban Consumers) (base year 1982-84-100) for San
Francisco-Oakland-San Xxxx, published by the Bureau of Labor Statistic of the
United States Department of Labor. If the Bureau of Labor Statistics revises
the Index, the parties agree that the Bureau of Labor Statistics will be the
sole
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judge of the comparability of successive indexes. If that agency,
however,fails to supply indexes that it deems comparable, or if no succeeding
index is published, the parties shall then negotiate to determine an
appropriate alternative published price index. If they are unable to agree on
an alternative Index within thirty (30) days after the request to do so is
made by one party to the other, then either party may request that each
appoint a person, within fifteen (15) days after the request, to select an
alternative published price index. The two persons so appointed, within
fifteen (15) days after the later of them is appointed, shall appoint a third
person to act with them in the selection of an alternative price index. If
either of the first two fails to appoint the third, or if Landlord or Tenant
fails to appoint one of the first two, then either Landlord or Tenant can
file a petition with the American Arbitration Association solely for the
purpose of selecting a third person who must be an M.A.I. appraiser with at
least ten years of commercial appraisal experience in northern Santa Xxxxxxx
or San Xxxx Obispo Counties. Each party shall bear half the cost of the
American Arbitration Association appointing the third person and of paying
the third person's fee. The third person, however selected, shall be a person
who has not previously acted in any capacity for either party. If any
appointee declines or is unable to serve, the appointee shall be replaced by
another person appointed in the same manner. Within thirty (30) days after
the appointment process is completed, and on the basis of all pertinent
facts, the appointees, by majority vote, shall select an alternative
published price index and advise Landlord and Tenant in writing of the
selection. Each person appointed as an arbitrator shall have at least 10
years prior experience in renting commercial real estate in northern Santa
Xxxxxxx County or San Xxxx Obispo County as a licensed California real estate
broker or 10 years commercial appraisal experience as an MAI appraiser. All
fees and expenses incurred in the appointment of the persons shall be shared
equally by Landlord and Tenant.
d. The Minimum Monthly Rent shall be waived until the date when
Tenant opens for business on the Premises, or through December 31, 1998,
whichever occurs first.
6. RENT ON EXTENDED TERM. The parties shall have thirty (30) days
after Landlord receives each Option Notice in which to agree on Minimum
Monthly Rent during the Extended Term. If the parties agree on the Minimum
Monthly Rent for the Extended Term during that period, they shall immediately
execute an amendment to this Lease stating the Minimum Monthly Rent.
If the parties are unable to agree on the Minimum Monthly Rent for
the Extended Term within that period, then within ten (10) days after the
expiration of that period each party, at its cost and by giving notice to the
other party, shall appoint an M.A.I. real estate appraiser or licensed real
estate broker with at least ten (10) years' full-time commercial appraisal or
commercial real estate experience in northern Santa Xxxxxxx or San Xxxx
Obispo County and set the Minimum Monthly Rent for the Extended Term. If a
party does not appoint an appraiser within ten (10) days after the other
party has given notice of the name of its appointee, the single appointee
shall set the Minimum Monthly Rent for the Extended Term. If the two
appraisers/brokers are appointed by the parties as stated in this paragraph,
they shall meet promptly and attempt to set the Minimum Monthly Rent for the
Extended Term. If they are unable to agree within thirty (30) days after the
second appraiser/broker has been appointed, they shall attempt to elect a
third appraiser who must be an M.A.I. appraiser with at least ten years of
commercial appraisal experience in northern Santa Xxxxxxx or San Xxxx Obispo
Counties within ten (10) days after the last day the two appraisers/brokers
are given to set the Minimum Monthly Rent. If they are unable to agree on the
third appraiser/broker, either of the parties to this Lease by giving ten
(10) days' notice to the other party can file a petition with the American
Arbitration Association solely for the purpose of selecting a third appraiser
who meets the qualifications stated in this paragraph. Each party shall bear
half the cost of the American Arbitration Association appointing the third
appraiser and of paying the third appraiser's fee. The third
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appraiser, however selected, shall be a person who has not previously acted
in any capacity for either party.
Within thirty (30) days after the selection of the third
appraiser, a majority of the appointees shall set the Minimum Monthly Rent
for the extended Term. If a majority of the appointees are unable to set the
Minimum Monthly Rent within the stipulated period of time, the three
appraisals shall be added together and their total divided by three; the
resulting quotient shall be the Minimum Monthly Rent for the Premises during
the Extended Term.
In setting the Minimum Monthly Rent for the Extended Term, the
appraiser/broker shall consider the highest and best commercial/retail use as
allowed by the current zoning ordinance for the Premises without regard to
the restriction on use of the Premises contained in this Lease. The appraisal
shall be on the basis of a triple net lease.
In no event, shall the rent on the Extended Term be less than the
rent determined in accordance with Section 5 as of the last day of the
Initial Term or then-current Extended Term. The rent determined in accordance
with this paragraph shall thereafter, commencing annually on November 1 of
each Extended Term, be adjusted in accordance with the formula set forth in
Paragraphs 5(b) and (c), above.
7. USE/HAZARDOUS SUBSTANCE/COMPLIANCE WITH LAW.
a. Tenant will occupy and use the Premises for a retail banking
business and all other operations incident to the conduct of the business,
and Tenant agrees not to use the Premises for any immoral or unlawful
purpose. Landlord agrees that, subject to Section 18 and to the prior
reasonable review and approval by Landlord and compliance with all
applicable governmental requirements and restrictions recorded prior to the
date of this Lease, Tenant may erect and maintain on the Premises and the
building and improvements any signs advertising Tenant's business, as Tenant
may desire.
b. Tenant shall not commit any acts on the Premises, nor use
the Premises in any manner that will increase the existing rates for or cause
the cancellation of any fire, liability, or other insurance policy insuring
the Premises or the improvements on the Premises. Tenant shall, at Tenant's
own cost and expenses, comply with all requirements of Landlord's insurance
carriers that are necessary for the continued maintenance at reasonable rates
of replacement cost fire and comprehensive general liability insurance
policies on the Premises and the improvements on the Premises.
c. The term "Hazardous Substances" as used in this Lease shall
mean any product, substance, chemical, material or waste whose presence,
nature, quantity and/or intensity of existence, use, manufacture, disposal,
transportation, spill, release or effect, either by itself or in combination
with other materials expected to be on the Premises, is either. (i)
potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for liability of Landlord to any governmental
agency or third party under any applicable statute or common law theory.
Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, byproducts or fractions
thereof. Tenant shall not engage in any activity in, or or about the Premises
which constitutes a Reportable use (as hereinafter defined) of Hazardous
Substances without the express prior written consent of Landlord and
compliance in a timely manner (at Tenant's sole cost and expense) with all
applicable law. "Reportable Use" shall mean (i) the installation or use of
any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that
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requires a permit from, or with respect to which a report, notice,
registration or business plan is required to be filed with, any governmental
authority. Reportable Use shall also include Tenant's being responsible for
the presence in, on or about the premises of a Hazardous Substance with
respect to which any applicable law requires that a notice be given to
persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Tenant may, without Landlord's prior consent,
but in compliance with all applicable law, use any ordinary and customary
materials reasonably required to be used by Tenant in the normal course of
Tenant's business permitted on the Premises, so long as such use is not a
Reportable Use and does not expose the Premises or neighboring properties to
any meaningful risk of contamination or damage or expose Landlord to any
liability therefor. In addition, Landlord may (but without any obligation to
do so) condition his consent to the use or presence of any Hazardous
Substance, activity or storage tank by Tenant upon Tenant's giving Landlord
such additional assurances as Landlord, in his reasonable discretion, deems
necessary to protect himself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefrom or
therefor, including, but not limited to, the installation (and removal on or
before Lease expiration or earlier termination) of reasonably necessary
protective modifications to the Premises (such as concrete encasement) and/or
the deposit of an additional security deposit under Paragraph 30 hereof.
d. If Tenant knows, or has reasonable cause to believe, that a
Hazardous Substance, or a condition involving or resulting from same, has
come to be located in, on, under or about the Premises, other than as
previously consented to by Landlord, Tenant shall immediately give written
notice of such fact to Landlord. Tenant shall also immediately give Landlord
a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action or proceeding given to, or received
from, any governmental authority or private party, or persons entering or
occupying the Premises, concerning the presence, spill, release, discharge
of, or exposure to, any Hazardous Substance or contamination in, on, or about
the Premises, including but not limited to all such documents as may be
involved in any Reportable Uses involving the Premises.
e. Tenant shall indemnify, protect, defend and hold Landlord,
his agents, employees, lenders and the Premises, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, permits and attorney's and consultant's
fees arising out of or involving any Hazardous Substance or storage tank
brought onto the Premises by or for Tenant or under Tenant's control.
Tenant's obligations under this paragraph shall include, but not be limited
to, the effects of any contamination or injury to person, property or the
environment created or suffered by Tenant, and the cost of investigation
(including consultant's and attorney's fees and testing), removal
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Landlord and Tenant shall release Tenant from its obligations under this
Lease with respect to Hazardous Substances or storage tanks, unless
specifically so agreed by Landlord in writing at the time of such agreement.
f. Except as otherwise provided in this Lease, Tenant shall, at
Tenant's sole cost and expense, fully, diligently and in a timely manner
comply with all "Applicable Law," which term is used in this Lease to include
all laws, rules, regulations, ordinances, directives, covenants, easements
and restrictions or record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Landlord's
engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene,
(ii) environmental condition on, in, under or about the Premises, including
soil and groundwater conditions, (iii) the use, generation, manufacture,
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production, installation, maintenance, removal, transportation, storage,
spill or release of any Hazardous Substance or storage tank), (iv) seismic
retrofitting, (v) fire suppression requirements, and (vi) Americans With
Disabilities Act accommodations, now in effect or which may hereafter come
into effect, and whether or not reflecting a change in policy from any
previously existing policy. Tenant shall, within five (5) days after receipt
of Landlord's written request, provide Landlord with copies of all documents
and information, including but not limited to permits, registrations,
manifests, applications, reports and certificates, evidencing Tenant's
compliance with any Applicable Law specified by Landlord, and shall
immediately upon receipt, notify Landlord in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Tenant or
the Premises to comply with any Applicable Law.
g. Landlord and Landlord's lenders shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at
reasonable times, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Tenant with this Lease and all Applicable
Laws (as defined in Paragraph 7.f) and to employ experts and/or consultants
in connection therewith and/or to advise Landlord with respect to Tenant's
activities, including but not limited to the installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance or storage
tank on or from the Premises.
8. UTILITIES. During the Term, Tenant shall pay, before delinquency,
all charges or assessments for telephone, water, sewer, gas, heat,
electricity, garbage disposal, trash disposal, and all other utilities and
services of any kind that may be used on the Premises.
9. TAXES.
a. Subject to the terms of Section 9(d), Tenant shall pay to
the public authorities charged with the collection on or before the last day
on which payment may be made without penalty or interest, or ten (10) days
after receipt of the tax xxxx, whichever is later, as additional rent, all
taxes, permit, inspection, and license fees, and other public charges of
whatever nature that are assessed against the Premises or arise because of
the occupancy, use, or possession of the Premises (including but not limited
to taxes on, or which shall be measured by, any rents or rental income, and
taxes on personal property, whether of Landlord or Tenant), subsequent to the
commencement of the Term, and all installments of assessments that are due
during the Term.
b. Landlord shall notify Tenant of the real property taxes and
immediately on receipt of the tax xxxx xxxxxxx Tenant with a copy of the tax
xxxx.
c. All real estate taxes levied on the Premises for the tax
year in which the Commencement Date falls shall be appropriately prorated
between Landlord and Tenant, so that Tenant's share will reflect the portion
of that tax year in which Tenant had possession of the Premises under this
Lease. Tenant shall pay Tenant's share of the taxes directly to Landlord and
not to the public authorities charged with the collection. That payment shall
constitute full performance by Tenant, and Landlord shall pay from those
funds and Landlord's own funds all of the taxes for that tax year. Taxes
levied on the Premises for the tax year in which the Termination Date occurs
shall be similarly prorated between Landlord and Tenant to reflect the period
of Tenant's possession of the Premises during that tax year. Tenant shall pay
Tenant's share of those taxes to Landlord directly rather than to the public
authorities, and that payment shall constitute full performance under this
Lease with respect to this tax liability.
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d. Tenant shall not be required to pay, discharge, or remove any
tax (including penalties and interest), assessment, tax lien, forfeiture, or
other imposition or charge against the Premises or any part of the Premises
or any improvements, so long as Tenant diligently and in good faith contests
the validity or the legality of the assessment, levy, or charge by
appropriate legal proceedings, which should prevent the collection of the
tax, assessment, imposition, or charge contested; provided however, that
Tenant, prior to the date that the tax, assessment, imposition, or charge is
due and payable, shall either have paid it under protest or shall have, (i)
posted a bond with Landlord sufficient to cover the amount of the taxes and
penalties and interest and, (ii) in the case of taxes other than real estate
taxes, given to Landlord a letter executed by an officer of Tenant assuring
Landlord that the tax, assessment, imposition, or charge will be paid when
and to the extent that the legal proceedings conclude in a final
determination that the tax, assessment, imposition, or charge is valid, legal
and owing. Upon such final determination, Tenant agrees to immediately pay
the contested tax, assessment, imposition, or charge, together with all
interest and penalties, if any, and remove and discharge any lien or
forfeiture arising from the prior nonpayment. Any proceedings for contesting
the validity, legality, or amount of any tax, assessment, imposition, or
charge, or to recover any tax, assessment, imposition, or charge paid by
Tenant, may be brought by Tenant in the name of Landlord or in the name of
Tenant, or both, as Tenant deems advisable. Landlord agrees that Landlord
will, upon the reasonable request of Tenant, execute or join in the execution
of any instrument or document necessary in connection with any proceeding.
However, if any proceedings are brought by Tenant, Tenant agrees to indemnify
Landlord for all reasonable loss, cost, or expense that may be imposed on
Landlord in connection with the proceeding. Tenant's right to contest taxes
as provided in this Lease shall not extend beyond the point where Landlord's
title to the Premises could be lost. In any event, Tenant shall notify
Landlord in advance of any tax contest proceedings that Tenant intends to
initiate, and shall then inform Landlord of all significant developments in
the proceedings as they may occur.
e. If Tenant has not paid any tax, assessment, or public charge
required by this Lease to be paid by Tenant before its delinquency, or if a
tax, assessment, or public charge is contested by Tenant and that tax,
assessment, or public charge has not been paid within thirty (30) days after
a final determination of the validity, legality, or amount of the tax,
assessment or public charge, then Landlord may, but shall not be required to,
pay and discharge the tax, assessment, or public charge. If a tax,
assessment, or public charge, including penalties and interest, are paid by
Landlord, the amount of that payment shall be due and payable to Landlord by
Tenant with the next succeeding rental installment, and shall bear interest
at the rate of ten percent (10%) per annum from the date of the payment by
Landlord until repayment by Tenant.
f. If any assessments for local improvements become a lien after
the Commencement Date, Tenant shall pay only the installments of the
assessments that become due and payable during the Term. On the request of
Tenant, Landlord agrees to cooperate or join the Tenant in any application
that may be necessary to permit the payment of the assessments in
installments.
g. The covenant and agreements to pay taxes by Tenant in Section 9
shall not be deemed to include the payment of any inheritance, estate,
succession, transfer, gift, franchise, corporation, income, or profit tax, or
capital levy that is or may be imposed on Landlord. If any excepted taxes
become a lien against the Premises, Landlord agrees to pay and discharge them
before foreclosure of the lien or to take the steps analogous to those
permitted to Tenant under Section 9(d) to contest the taxes, so long as the
steps sufficiently protect Tenant's quiet enjoyment of the Premises. If
Landlord fails to pay and discharge those taxes prior to the institution of
proceedings to foreclose the lien, Tenant, at Tenant's sole option, may
advance the funds required to pay and discharge the taxes, together with all
penalties and
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interest, in which event the amount of funds so advanced shall be immediately
due and payable from Landlord to Tenant and shall bear interest at the rate
of ten percent (10%) per annum from the date of payment by Tenant, until
repaid. Alternatively, Tenant may apply the amount advanced to the payment of
the next succeeding rental installment or installments otherwise payable to
Landlord until the advance, with interest, has been repaid to Tenant;
provided, however, that the rights of Tenant under Section 9(g) shall be
limited to those instances where the foreclosure or other enforcement of the
lien may disturb Tenant's possession and peaceful enjoyment of the Premises.
10. CONDITION OF PREMISES. Tenant acknowledges that as of the date of
this Lease, Tenant has inspected the Premises and had such contractors,
consultants, engineers, architects, roofers, HVAC inspectors and other
persons, as Tenant so desires, inspect the Premises for Tenant. Based on
Tenant's own inspection, and the inspection of Tenant's inspectors,
consultants and experts, Tenant acknowledges that the improvements are in
good order, repair and condition. Landlord makes no representations regarding
the condition of the premises, which are leased "AS IS."
11. REPAIRS AND MAINTENANCE.
a. Tenant shall keep in good order, condition and repair the
Premises and every part thereof, structural and non-structural, (whether or
not such portion of the Premises requiring repair or the means of repairing
same are reasonably or readily accessible to Tenant, and whether or not the
need for such repairs occurs as a result of Tenant's use, any prior use, the
elements or age of such portion of the Premises), including without limiting
the generality of the foregoing, all plumbing, heating, air conditioning
(Tenant shall procure at Tenant's expense, an air conditioning system
maintenance contract), ventilating, electrical, lighting facilities and
equipment within the Premises, fixtures, walls (interior and exterior,
foundations, ceilings, roofs (interior and exterior), floors, windows, doors,
plate glass and skylights located within the Premises, and all landscaping,
driveways, parking lots, fences and signs located on the Premises and the
sidewalks adjacent to the Premises.
b. Tenant shall, not less frequently than once each fifteen (15)
years of the Term and Extended Terms, resurface the parking lot. Tenant
shall, not less frequently than once every three (3) years of the Term and
Extended Terms, slurry coat and restripe the parking lot. Tenant shall, not
less frequently than once each ten (10) years of the Term and Extended Terms,
repaint the exterior of the building with the color scheme to be approved in
advance by Landlord, if different from existing color scheme.
c. If at any time during the Term, including renewals or
extensions, Tenant fails to maintain the Premises or make any repairs or
replacements as required by Xxxxxxx 00, Xxxxxxxx xxx, xx thirty (30) days'
prior written notice, unless repairs are deemed emergency or structural, but
shall not be required to, enter the Premises and perform the maintenance or
make the repairs or replacements for the account of Tenant; any sums expended
by Landlord in so doing, together with interest at ten percent (10%) per
annum, shall be deemed additional rent and shall be immediately due from
Tenant on demand of Landlord.
d. Tenant waives the provisions of Civil Code Sections 1941 and
1942 and any other law that would require Landlord to maintain the Premises
in a tenantable condition or would provide Tenant with the right to make
repairs and deduct the cost of those repairs from the rent.
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12. ALTERATIONS.
a. Tenant shall have the right to make alterations to the building
and improvements on the Premises, provided that, if the reasonably estimated
cost of alterations exceeds Ten Thousand Dollars ($10,000.00), or involves
structural modifications, Landlord shall have the right to consent to the
alterations, and Landlord agrees not to unreasonably withhold approval of the
alterations. Approval, however, may be conditioned upon the receipt by
Landlord of a set of plans and specifications for the alterations no later
than twenty (20) days prior to the scheduled construction of the alterations,
and upon Tenant's agreement to restore the Premises, if Landlord requires it
at the end of the Term, to the same condition as before the alterations. All
improvements, additions, alterations, and major repairs shall be in
accordance with applicable laws and at Tenant's own expense. Tenant will
indemnify and defend Landlord for all liens, claims, or damages caused by
remodeling, improvements, additions, alterations, and major repairs. Landlord
agrees, when requested by Tenant, to execute and deliver any applications,
consents, or other instrument required to permit Tenant to do this work or to
obtain permits for the work.
b. Except as set forth in Section 12(a), all alterations and
improvements made to the Premises shall become the property of Landlord and
shall remain on and be surrendered with the Premises at the expiration or
sooner termination of this Lease, including any renewals or extensions.
c. At least ten (10) days before any construction commences or
materials are delivered for any alterations that Tenant is making to the
Premises, whether or not Landlord's consent is required, Tenant shall give
written notice to Landlord as to when the construction is to commence or the
materials are to be delivered. Landlord shall then have the right to post and
maintain on the Premises any notices that are required to protect Landlord
and Landlord's interest in the Premises from any liens for work and labor
performed or materials furnished in making the alterations; provided,
however, that it shall be Tenant's duty to keep the Premises free and clear
of all liens, claims, and demands for work performed, materials furnished, or
operations conducted on the Premises at the request of Tenant.
d. Tenant will not at any time permit any mechanics', laborers', or
materialmen's liens to stand against the Premises for any labor or material
furnished to Tenant or claimed to have been furnished to Tenant or Tenant's
agents, contractors, or subtenants, in connection with work of any character
performed or claimed to have been performed on the Premises by or at the
direction or sufferance of Tenant; provided, however, that Tenant shall have
the right to contest the validity or amount of any lien or claimed lien, upon
giving to Landlord a letter executed by Tenant assuring that the lien or
claimed lien will be paid, when and to the extent that the lien is finally
determined to be valid and owing. Tenant's right, however, to contest these
liens shall not extend beyond the point where Landlord's title to the
Premises could be lost. On final determination of the lien or claim of lien,
Tenant will immediately pay any final judgment rendered, with all property
costs and charges, and shall have the lien released or judgment satisfied at
Tenant's own expense. If Tenant fails to pay the judgment promptly or
otherwise fails to prevent any sale, foreclosure, or forfeiture of the
Premises because of a lien, Landlord shall have the right, upon five (5)
days' written notice to Tenant, to pay or prevent this action, and the amount
paid by Landlord shall be immediately due and payable to Landlord, and shall
bear interest at the rate of ten percent (10%) per annum from the date of
payment by Landlord until repayment by Tenant.
13. ENTRY. Tenant shall permit Landlord or Landlord's agents,
representatives, or employees to enter the Premises at all reasonable times
and upon reasonable notice to inspect
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the Premises to determine whether Tenant is complying with the terms of this
Lease, to show the Premises to prospective purchasers, lenders or tenants,
and to do other lawful acts that may be necessary to protect Landlord's
interest in the Premises under this Lease or to perform Landlord's duties
under this Lease. Landlord may place "For Rent" signs during the last six (6)
months of any term.
14. SURRENDER OF PREMISES; HOLDING OVER.
a. On the Termination Date or the end of any extension or renewal
of this Lease, Tenant shall promptly surrender and deliver the Premises to
Landlord in as good condition as they are now at the date of this Lease,
reasonable wear and tear excepted.
b. At the end of the Term, or any extension, should Tenant hold
over for any reason, it is agreed that in the absence of a written agreement
to the contrary, that tenancy shall be from month-to-month only and not a
renewal of this Lease, nor an extension for any further term. Tenant shall
pay Minimum Monthly Rent in an amount equal to one hundred ten percent (110%)
of the Minimum Monthly Rent payable immediately prior to the end of the Term
or any extension and the month-to-month tenancy shall be subject to every
other term, covenant, and condition in this Lease that is consistent with and
not contrary to a month-to-month tenancy.
15. INDEMNITY. Tenant agrees to indemnify and defend Landlord from any
claims, demands, and causes of action of any nature and any expense incident
to the defense, for injury to or death of persons or loss of or damage to
property occurring on or about the Premises that grow out of or are connected
with Tenant's use and occupation of the Premises or the condition of the
Premises, unless such claim arises as a result of Landlord's grossly
negligent or willful conduct during the Term.
Tenant hereby agrees that Landlord shall not be liable for injury to
Tenant's business or any loss of income therefrom or for damages to the
goods, wares, merchandise, inventory, supplies or other property of Tenant,
Tenant's employees, invitees, customers, or any other person in or about the
Premises, nor shall Landlord be liable for injury to Tenant's employees,
agents or contractors, whether such damage or injury is caused by or results
from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the damage or injury results from conditions arising
upon the Premises or from other sources or places and regardless whether the
cause of such damage or injury or the means or repairing the same is
inaccessible to Tenant.
16. INSURANCE.
a. Tenant agrees at all times during the Term and during any
extension, to maintain in force, at Tenant's sole cost and expense, insurance
on the building and improvements that may be built or placed on the Premises,
against the hazard of fire, with all standard extended coverage, including
vandalism and malicious mischief, in an amount equal to their full insurable
value, with a replacement cost endorsement, including inflation guard
protection. The deductible shall not exceed $5,000 per occurrence for which
Tenant shall be liable in the event of an insured loss. Tenant further agrees
that once every two (2) years during the Term and any extension, Tenant will
review with the insurance companies issuing the insurance the costs of
building, labor and materials, and other pertinent factors to determine
whether the stipulated value of the building and improvements stated in the
insurance is adequate. If the stipulated value is determined by the insurance
companies to be inadequate, Tenant agrees to immediately adjust the aggregate
amount of the insurance to the extent
10
required to make the stipulated value adequate. Landlord agrees to cooperate
fully with Tenant in making this determination for stipulated value. Tenant
agrees to give prompt, written notification to Landlord as to the results of
these periodic determinations for stipulated value. In absence of
notification of an insurance review by Tenant by December 31 of every second
year of the Term and each Extended Term, Landlord may cause a review to be
completed. Tenant agrees that if the buildings and improvements on the
Premises are destroyed and the proceeds of the insurance policy and any
policy carried by Landlord amount to less than the cost of rebuilding the
buildings and improvements, Tenant will advance and pay any sum, which along
with the insurance proceeds, is necessary to meet the cost of rebuilding. No
work or repair or reconstruction shall be undertaken until Tenant has
delivered to Landlord plans and specifications for the work that are to be
prepared by a competent architect, Landlord approves them (which approval
will not be unreasonably withheld), and Tenant delivers to Landlord an
estimate of the cost of the work to be done in accordance with the plans; the
estimate is to be prepared by a competent contractor. If Tenant fails to
commence the rebuilding, reconstruction, repair, or restoration of any
building or improvement as required under this Lease, Landlord or any
beneficiary under any deed of trust covering the Premises, if permitted by
the deed of trust, may, but shall not be obligated to, enter the Premises and
do whatever may be necessary for the rebuilding, reconstruction, repair, or
restoration of any building or improvement as required of Tenant under the
terms of this Lease.
b. Tenant agrees to procure and maintain public liability
insurance, from a responsible insurance company authorized to do business in
California, with a combined single limit of not less than Two Million Dollars
($2,000,000.00) for injury or death to any person or damage to property and
at least Two Million Dollars ($2,000,000.00) excess umbrella coverage for
injury or death or property damage, for any claims, demands, or causes of
action of any person arising out of accidents occurring on the Premises
during the Term or arising out of Tenant's use, occupancy or maintenance of
the Premises. Such insurance shall be on an occurrence basis with an
"Additional Insured--Managers or Lessors of Premises Endorsement" and contain
the "Amendment of the Pollution Exclusion Endorsement" for damage caused by
heat, smoke or fumes from a hostile fire.
c. Tenant shall, in addition, obtain and keep in force during the
Term of this Lease a policy or policies in the name of Landlord, with loss
payable to Landlord and Lender(s), insuring the loss of the full rental and
other charges payable by Tenant to Landlord under this Lease for one (1) year
(including all real estate taxes, insurance costs, and any scheduled rental
increases). Said insurance shall provide that in the event the Lease is
terminated by reason of an insured loss, the period of indemnity for such
coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental
income, property taxes, insurance premium costs and other expenses, if any,
otherwise payable by Tenant, for the next twelve (12) month period. Tenant
shall be liable for any deductible amount in the event of such loss.
d. Each policy of insurance shall be issued by a responsible
insurance company authorized to do business in California, and shall be
issued in the names of Landlord, Tenant, and any beneficiary under any deed
of trust covering the Premises, if required by the deed of trust, as their
respective interests may appear. Tenant shall deliver a duplicate policy and
certificate for each insurance policy to Landlord with all relevant
endorsements. Each policy of insurance shall be primary and noncontributory
with any policies carried by Landlord and, to the extent obtainable, any loss
shall be payable notwithstanding any act or negligence of Landlord that might
otherwise result in forfeiture of insurance. Each insurance policy shall
11
provide that a thirty (30) day notice of cancellation and of any material
modification of coverage shall be given to all named insureds. The insurance
coverage required under this Section may be carried by Tenant under a blanket
policy insuring other locations of Tenant's business, provided that the
Premises covered by this Lease are specifically identified as included under
that policy. Tenant agrees that upon the failure to insure as provided in
this Lease, or to pay the premiums in the insurance, Landlord may contract
for the insurance and pay the premiums, and all sums expended by Landlord for
the insurance shall be considered additional rent under this Lease and shall
be immediately repayable by Tenant.
e. The insurance companies issuing policies under this section shall
have a general policyholder's rating of at least "A" and a financial rating
of at least Class XIII as rated in the most current available BEST'S KEY
RATING GUIDE.
f. At all times during the Term and any extensions of renewals, Tenant
agrees to keep and maintain, or cause Tenant's agents, contractors, or
subcontractors to keep and maintain, workmen's compensation insurance and
other forms of insurance as may from time to time be required by law or may
otherwise be necessary to protect Landlord and the Premises from claims of
any person who may at any time work on the Premises, whether as a servant,
agent, or employee of Tenant or otherwise. This insurance shall be maintained
at the expense of Tenant or Tenant's agents, contractors, or subcontractors
and not at the expense of Landlord.
g. Landlord agrees that it will tender and turn over to Tenant or to
Tenant's insurers the defense of any claims, demands, or suits instituted,
made, or brought against Landlord or against Landlord and Tenant jointly,
within the scope of this Section. However, Landlord shall have the right to
approve the selection of legal counsel, to the extent that selection is
within Tenant's control, which approval shall not be unreasonably withheld or
delayed. In addition, Landlord shall retain the right at Landlord's election
to have Landlord's own legal counsel participate as co-counsel, to the extent
that claims are made that may not be covered by Tenant's insurers.
h. Tenant and Landlord each release the other and waive the entire
right of recovery against the other for loss or damage arising out of or
incident to the perils insured against, which perils occur in, on, or about
the Premises, whether due to the negligence of Landlord or Tenant or their
agents, employees, contractors, or invitees. Tenant and Landlord shall, upon
obtaining the required policies of insurance, give notice to the insurance
carriers that this mutual waiver of subrogation is in this Lease.
17. TRADE FIXTURES.
a. Tenant shall have the right, at any time and from time to time
during the Term and any renewals or extensions, at Tenant's sole cost and
expense, to install and affix on the Premises items for use in Tenant's trade
or business, which Tenant, in Tenant's sole discretion, deems advisable
(collectively Trade Fixtures). Trade Fixtures installed in the Premises by
Tenant shall always remain the property of Tenant and may be removed at the
expiration of the Term or any extension, provided that any damage to the
Premises caused by the removal of the Trade Fixtures shall be repaired by
Tenant, and further provided that Landlord shall have the right to keep any
Trade Fixtures or to require Tenant to remove any Trade Fixtures that Tenant
might otherwise elect to abandon.
b. Any Trade Fixtures that are not removed from the Premises by
Tenant within thirty (30) days after the Termination Date shall be deemed
abandoned by Tenant and shall
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automatically become the property of Landlord as owner of the real property
to which they are affixed.
18. SIGNS. Tenant may maintain on the exterior of the Premises any
sign, awning, canopy, marquee or other advertising, provided that such sign,
awning, canopy, marquee or advertising complies with all applicable city and
county ordinances governing the placement of signs and advertising. Thirty
(30) days after the Termination Date, all of the items mentioned in this
section that are not removed from the Premises may, without damage or
liability, be destroyed by the Landlord.
19. DAMAGE AND DESTRUCTION.
a. If the building or other improvements constructed on the
Premises are damaged or destroyed, whether partially or entirely, from a risk
covered by insurance required by this Lease, Tenant, at Tenant's own cost and
expense, but utilizing the proceeds of insurance, if any, including any
insurance carried by Landlord to the extent available, shall repair, restore,
or reconstruct the damaged or destroyed building and other improvements so
that the condition and quality of the new building and other improvements
shall be as near as reasonably possible to the condition and quality
immediately prior to the damage or destruction. Damage to or destruction of
any portion of the building, fixtures, or other improvements on the Premises
by fire, the elements, or any other cause shall not terminate this Lease or
entitle Tenant to surrender the Premises or otherwise affect the respective
obligations of the parties, any present or future law to the contrary
notwithstanding.
b. If, during the Term or any Extended Term, the Premises are
totally or partially destroyed from a risk not covered by the insurance
required by this Lease, rendering the Premises totally or partially
inaccessible or unusable, Tenant shall restore the Premises to substantially
the same condition as they were in immediately before destruction. Such
destruction shall not terminate this Lease. If the existing laws do not
permit the restoration, either party can terminate this Lease immediately by
giving notice to the other party.
If the cost of restoration exceeds $50,000, Tenant can elect to
terminate this Lease by giving notice to Landlord within fifteen (15) days
after determining the restoration cost. If Tenant elects to terminate this
Lease, Landlord, within thirty (30) days after receiving Tenant's notice to
terminate, can elect to pay to Tenant, at the time Landlord notifies Tenant
of its election, the difference between $50,000 and the actual cost of
restoration, in which case Tenant shall restore the Premises. On Landlord's
making its election to contribute, each party shall deposit immediately the
amount of its contribution with the insurance trustee provided for in
subparagraph d. If the destruction does not exceed $50,000, Tenant shall
immediately proceed with the restoration.
If Tenant elects to terminate this Lease and Landlord does not
elect to contribute toward the cost of restoration as provided in this
paragraph, this Lease shall terminate.
c. If, during the Term or any Extended Term, the Premises are
destroyed by a risk covered by the insurance required by this Lease, and the
total amount of loss does not exceed $100,000, Tenant shall make the loss
adjustment with the insurance company insuring the loss. The proceeds shall
be paid directly to Tenant for the sole purpose of making the restoration of
the Premises.
d. If, during the Term or any Extended Term, the Premises are
destroyed from a risk covered by the insurance required by this Lease, and
the total amount of loss exceeds
13
$100,000, Tenant shall make the loss adjustment with the insurance company
insuring the loss and on receipt of the proceeds shall immediately pay them
to First American Title insurance Company or other mutually acceptable
stakeholder ("Insurance trustee").
If the Premises are destroyed from a risk not covered by the
insurance required by this Lease, and Tenant has the obligation to restore
the Premises, both parties shall deposit with the insurance trustee their
respective contributions toward the cost of restoration. All sums deposited
with the insurance trustee shall be held for the following purposes and the
insurance trustee shall have the following powers and duties:
The sums shall be paid in installments by the insurance trustee to
the contractor retained by Tenant as construction progresses, for payment of
the cost of restoration. A ten percent (10%) retention fund shall be
established that will be paid to the contractor on completion of restoration,
payment of all costs, expiration of all applicable lien periods, and proof
that the Premises are free of all mechanics' liens and lienable claims.
Payments shall be made on presentation of certificates or vouchers
from the architect or engineer retained by Tenant showing the amount due. If
the insurance trustee, in its reasonable discretion, determines that the
certificates or vouchers are being improperly approved by the architect or
engineer retained by Tenant, the insurance trustee shall have the right to
appoint an architect or an engineer to supervise construction and to make
payments on certificates or vouchers approved by the architect or engineer
retained by the insurance trustee. The reasonable expense and charges of the
architect or engineer retained by the insurance trustee shall be paid by the
insurance trustee out of the trust fund.
If the sums held by the insurance trustee are not sufficient to pay
the actual cost of restoration, Tenant shall deposit the amount of the
deficiency with the insurance trustee within ten (10) days after request by
the insurance trustee indicating the amount of the deficiency.
Any sums not disbursed by the insurance trustee after restoration
has been completed and final payment has been made to Tenant's contractor
shall be delivered within fifteen (15) days (after demand made by either
party on the insurance trustee, with a copy to Landlord's lender), by the
insurance trustee to Landlord's lender and shall be applied by Landlord's
lender to reduce the loan.
Any undisbursed funds after compliance with the provisions of this
paragraph shall be delivered to landlord to the extent of Landlord's
contribution to the fund, and the balance, if any, shall be paid to Tenant.
All actual costs and charges of the insurance trustee shall be paid
by Tenant.
If the insurance trustee resigns or for any reason is unwilling to
act or continue to act, Landlord shall substitute a new trustee in the place
of the designated insurance trustee. The new trustee must be an institutional
lender or title company doing business in the City of San Xxxx Obispo or the
City of Santa Maria, California.
Both parties shall promptly execute all documents and perform all
acts reasonably required by the insurance trustee to perform its obligation
under this paragraph.
e. If the Premises are damaged or destroyed in whole or in part,
Tenant shall proceed with diligence to have plans and specifications prepared
and obtain approval by Landlord, which approval shall not be unreasonably
withheld, to commence rebuilding,
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reconstruction, or restoration as promptly as possible after the occurrence of
the event causing the damage or destruction, and thereafter to diligently
complete the work. If Tenant does not proceed with diligence and does not
diligently finish the work, Landlord or any beneficiary under any deed of
trust covering the Premises, if permitted by the deed of trust, may, but
shall not be obligated to, on thirty (30) days prior written notice, enter
the Premises and do whatever may be necessary for the rebuilding,
recordation, repair, or restoration of any building or improvements damaged
or destroyed.
(a) Regardless of any contrary provisions in this Lease, if
the building or other improvements to be constructed on the Premises or any
substitute are damaged or destroyed by any cause to the extent of more than
twenty-five percent (25%) of its insurable value during the last one (1) year
of the Term or any extension, Tenant may, at Tenant's sole option, terminate
this Lease within ninety (90) days of the damage or destruction by giving
written notice to Landlord. In the event of termination, Tenant shall pay to
Landlord all insurance proceeds, if any, received by Tenant as a result of
the damage or destruction to the extent allocable to the building or other
improvements owned by Landlord.
20. CONDEMNATION.
a. If, during the Term or any renewal or extension, the whole of
the Premises shall be taken pursuant to any condemnation proceeding, this
Lease shall terminate as of 12:01 a.m. of the date that actual physical
possession of the Premises is taken, and after that, both Landlord and Tenant
shall be released from all obligations under this Lease.
b. If, during the Term or any renewal or extension, only a part of
the Premises is taken pursuant to any condemnation proceeding and the
remaining portion is not suitable or adequate for the purposes for which
Tenant was using the Premises prior to the taking, or if by reason of any law
or ordinance the use of the Premises for the purposes specified in this Lease
shall become unlawful, then and after the taking or after the occurrence of
other described events, Tenant shall have the option to terminate, and the
option can be exercised only after the taking or after the occurrence of
other described events by Tenant giving ten (10) days' written notice to
Landlord, and rent shall be paid only to the time when Tenant surrenders
possession of the Premises. Without limiting the generality of the previous
provision, it is agreed that in the event of a partial taking of the Premises
pursuant to any condemnation proceeding, if the number of square feet of
floor area in the portion of the buildings located on the Premises remaining
after the taking is less than seventy-five percent (75%) of the number of
square feet of floor area at the commencement of the Term, Tenant shall,
after the taking, have the option to terminate this Lease on ten (10) days'
written notice to Landlord, and rent shall be paid only to the time when
Tenant surrenders possession of the Premises.
c. If only a part of the Premises is taken pursuant to any
condemnation proceeding under circumstances that Tenant does not have the
option to terminate this Lease as provided in this Section, or having the
option to terminate, Tenant elects not to terminate, then Landlord shall at
Landlord's expense promptly proceed to restore the remainder of the Premises
to a self-contained architectural unit, and the Minimum Monthly Rent payable
shall be reduced effective the date of the taking to an amount that shall be
in the same proportion to Minimum Monthly Rent payable prior to the taking,
as the number of square feet of floor area remaining after the taking bears
to the number of square feet of floor area immediately prior to the taking.
d. If the whole or any part of the Premises are taken pursuant to
any condemnation proceeding, then Landlord shall be entitled to the entirety
of any condemnation award except (1) that portion allocable to Tenant's
unsalvageable trade fixtures, or if Tenant
15
elects to remove Tenant's trade fixtures, a sum for the reasonable removal
and relocation costs not to exceed the undepreciated value of such fixtures
as reflected in Tenant's most recent federal income tax return; (2) Tenant's
relocation costs; (3) Tenant's loss of goodwill excluding any "bonus value"
based on the actual rent reserved under the Lease to its fair rental value as
of the date of condemnation; and (4) the undepreciated percentage of the
lesser of (a) actual cost of the tenant improvements completed at the
inception of this Lease, or (b) the increase in value of Landlord's Premises
as a result of Tenant's tenant improvements. As an example of subparagraph
(4), if Tenant has invested $100,000 in tenant improvements and has
depreciated 50% of those improvements, and the value of the Premises has been
increased by $50,000 as a result of Tenant's improvements; then Tenant would
be entitled to 50% times $50,000 (the lesser of the increase in value of the
Premises or cost of tenant improvements) as and for its portion of a
condemnation award. The value of Tenant's tenant improvements in the Premises
shall be determined as of the date of the condemnation award.
e. In the event the adjoining property to the Premises on which
Tenant has constructed a parking lot is condemned in its entirety, then
Tenant, at Tenant's election, may terminate this Lease upon paying Landlord
twelve (12) monthly rental payments at the then current Minimum Monthly Rent,
in advance, concurrently with the delivery of a 30-day notice terminating the
Lease.
21. ASSIGNMENT AND SUBLETTING.
a. Except as provided in Section 21(b), Tenant shall not assign
this Lease without the prior written consent of Landlord, which shall not be
unreasonably withheld, provided that subsequent to any assignment Tenant
shall remain primarily liable for the rental to be paid under this Lease and
the performance of all terms and conditions of this Lease. In evaluating
whether or not to provide consent to a proposed assignment or sublease,
Tenant, at a minimum, shall provide to Landlord a copy of the proposed
assignment or sublease, a current financial statement from the proposed
subtenant/assignee, a statement of intended use by the proposed assignee/
subtenant, and such other information as may be reasonably requested by
Landlord in evaluating the proposed assignment or sublease. Landlord shall be
entitled to condition his consent on the agreement of Tenant to share equally
any increase in rent over the rent stated in this Lease for the duration of
the proposed assignment or sublease.
b. However, Tenant may assign this Lease without Landlord's
written consent if the assignment is made
(i) to a successor corporation into which or with which Tenant is
merged or consolidated in accordance with applicable statutory provisions
for the merger or consolidation of corporations,
(ii) to a wholly-owned subsidiary of Tenant, or
(iii) to a corporation to which Tenant shall sell all or
substantially all of Tenant's assets; and the liabilities of the
corporations participating in the merger or consolidation or of the
transferor corporation must be assumed by the corporation surviving the
merger or created by the consolidation or by the transferee corporation,
in the event of a transfer to a wholly-owned subsidiary or a sale of all
or substantially all assets, and that corporation (except in the case of
a wholly-owned subsidiary) must have a net worth at least equal to the
net worth of Tenant at the time of execution of this Lease. Upon
delivery to Landlord, by a successor corporation to which this Lease is
assigned or transferred, of the agreement of the corporation to be bound
by the terms, covenants,
16
and conditions of this Lease to be performed by Tenant after the date
of the assignment or transfer and documentation satisfactory to Landlord
demonstrating net worth and operation income, Tenant shall be released and
discharged from all obligations later arising under this Lease, except
where the transfer is to a wholly-owned subsidiary of Tenant.
c. In the event Tenant shall assign or sublet the Premises or
request the consent of Landlord to any assignment or subletting, or if Tenant
shall request the consent of Landlord for any act Tenant proposes to do, then
Tenant shall pay Landlord's reasonable attorneys' fees and consultants' fees
in connection with evaluating such requests and/or proposed sublease or
assignment.
22. DEFAULT. Any of the following events or occurrences shall constitute
a material breach of this Lease by Tenant and, after the expiration of any
applicable grace period, shall constitute an event of default (each an Event
of Default):
a. The failure by Tenant to pay any amount in full when it is due
under the Lease;
b. The failure by Tenant to perform any obligation under this
Lease, which by its nature Tenant has no capacity to cure;
c. The failure by Tenant to perform any other non-monetary
obligation under this Lease, if the failure has continued for a period of
thirty (30) days after Landlord demands in writing that Tenant cure the
failure. If, however, by its nature the failure cannot be cured within thirty
(30) days, Tenant may have a longer period as is necessary to cure the
failure, but this is conditioned upon Tenant's promptly commencing to cure
within the thirty (30) day period and thereafter diligently completing the
cure. Tenant shall indemnify and defend Landlord against any liability,
claim, damage, loss or penalty that may be threatened or may in fact arise
from that failure during the period the failure is uncured;
d. Any of the following: A general assignment by Tenant for the
benefit of Tenant's creditors; any voluntary filing, petition, or application
by Tenant under any law relating to insolvency or bankruptcy, whether for a
declaration of bankruptcy, a reorganization, an arrangement, or otherwise;
the abandonment, vacation, or surrender of the Premises by Tenant without
Landlord's prior written consent; or the dispossession of Tenant from the
Premises (other than by Landlord) by process of law or otherwise;
e. The appointment of a trustee or receiver to take possession of
all or substantially all of Tenant's assets; or the attachment, execution or
other judicial seizure of all or substantially all of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, unless the appointment
or attachment, execution, or seizure is discharged within thirty (30) days;
or the involuntary filing against Tenant, or any general partner of Tenant if
Tenant is a partnership, of
(i) a petition to have Tenant, or any partner of Tenant if Tenant is
a partnership, declared bankrupt, or
(ii) a petition for reorganization or arrangement of Tenant under any
law relating to insolvency or bankruptcy, unless, in the case of any
involuntary filing, it is dismissed within sixty (60) days;
17
f. The abandonment of the Premises by Tenant.
23. REMEDIES. Upon the occurrence of an Event of Default, Landlord, in
addition to any other rights or remedies available to Landlord at law or in
equity, shall have the right to
a. terminate this Lease and all rights of Tenant under this Lease
by giving Tenant written notice that this Lease is terminated, in which case
Landlord may recover from Tenant the aggregate sum of
(i) the worth at the time of award of any unpaid rent that had been
earned at the time of termination;
(ii) the worth at the time of award of the amount by which (A) the
unpaid rent that would have been earned after termination until the time
of award exceeds (B) the amount of the rental loss, if any, as Tenant
affirmatively proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which (A) the
unpaid rent for the balance of the term after the time of award exceeds
(B) the amount of rental loss, if any, as Tenant affirmatively proves
could be reasonably avoided;
(iv) any other amount necessary to compensate Landlord for all the
detriment caused by Tenant's failure to perform Tenant's obligations or
that, in the ordinary course of things, would be likely to result from
Tenant's failure; and
(v) all other amounts in addition to or in lieu of those previously
set out as may be permitted from time to time by applicable California
law.
As used in clauses (i) and (ii) of Section 23(a), the worth at the time
of award is computed by allowing interest at the rate of ten percent (10%)
per annum. As used in clause (iii) of Section 23(a), the worth at the time of
award is computed by discounting that amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%). As used in this Section, the term rent shall include Minimum Monthly
Rent and any other payments required by Tenant under this Lease.
b. continue this Lease, and from time to time, without terminating
this Lease either
(i) recover all rent and other amounts payable as they become due or
(ii) relet the Premises or any part on behalf of Tenant on terms and
at the rent that Landlord, in Landlord's sole discretion, may deem
advisable, all with the right to make alterations and repairs to the
Premises, at Tenant's cost, and apply the proceeds of reletting to the
rent and other amounts payable by Tenant. To the extent that the rent and
other amounts payable by Tenant under this Lease exceed the amount of
the proceeds from reletting, the Landlord may recover the excess from
Tenant as and when due.
c. Upon the occurrence of an Event of Default, Landlord shall also
have the right, with or without terminating this Lease, to re-enter the
Premises and remove all persons and property from the Premises. Landlord may
store the property removed from the Premises in a public warehouse or
elsewhere at the expense and for the account of Tenant.
18
d. None of the following remedial actions, alone or in combination,
shall be construed as an election by Landlord to terminate this Lease unless
Landlord has in fact given Tenant written notice that this Lease is
terminated or unless a court of competent jurisdiction decrees termination of
this Lease: any act by Landlord to maintain or preserve the Premises; any
efforts by Landlord to relet the Premises; any re-entry, repossession, or
reletting of the Premises; or any re-entry, repossession, or reletting of the
Premises by Landlord pursuant to this Section. If Landlord takes any of the
previous remedial actions without terminating this Lease, Landlord may
nevertheless at any later time terminate this Lease by written notice to
Tenant.
e. If Landlord relets the Premises, Landlord shall apply the
revenue from the reletting as follows: first, to the payment of any
indebtedness other than rent due from Tenant to Landlord; second, to the
payment of any cost of reletting, including without limitation finder's fees
and leasing commissions; third, to the payment of the cost of any maintenance
and repairs to the Premises; and fourth, to the payment of rent and other
amounts due and unpaid under this Lease. Landlord shall hold and apply the
residue, if any, to payment of future amounts payable under this Lease as the
same may become due, and shall be entitled to retain the eventual balance
with no liability to Tenant. If the revenue from reletting during any month,
after application pursuant to the previous provisions, is less than the sum
of (i) Landlord's expenditures for the Premises during that month and (ii)
the amounts due from Tenant during that month, Tenant shall pay the
deficiency to Landlord immediately upon demand.
f. After the occurrence of an Event of Default, Landlord, in
addition to or in lieu of exercising other remedies, may, but without any
obligation to do so, cure the breach underlying the Event of Default for the
account and at the expense of Tenant. However, Landlord must by prior notice
first allow Tenant a reasonable opportunity to cure, except in cases of
emergency, where Landlord may proceed without prior notice to Tenant. Tenant
shall, upon demand, immediately reimburse Landlord for all costs, including
costs of settlements, defense, court costs, and attorney fees, that Landlord
may incur in the course of any cure.
g. No security or guaranty for the performance of Tenant's
obligations that Landlord may now or later hold shall in any way constitute a
bar or defense to any action initiated by Landlord for unlawful detainer or
for the recovery of the Premises, for enforcement of any obligation of
Tenant, or for the recovery of damages caused by a breach of this Lease by
Tenant or by an Event of Default.
h. Except where this is inconsistent with or contrary to any
provisions of this Lease, no right or remedy conferred upon or reserved to
either party is intended to be exclusive of any other right or remedy, or any
right or remedy given or now or later existing at law or in equity or by
statute. Except to the extent that either party may have otherwise agreed in
writing, no waiver by a party of any violation or nonperformance by the other
party of any obligations, agreements, or covenants under this Lease shall be
deemed to be a waiver of any subsequent violation or nonperformance of the
same or any other covenant, agreement, or obligation, nor shall any
forbearance by either party to exercise a remedy for any violation or
nonperformance by the other party be deemed a waiver by that party of the
rights or remedies with respect to that violation or nonperformance.
24. LATE CHARGE. Tenant acknowledges that Tenant's failure to pay any
installment of the Minimum Monthly Rent, or any other amounts due under this
Lease as and when due may cause Landlord to incur costs not contemplated by
Landlord when entering into this Lease, the exact nature and amount of which
would be extremely difficult and impracticable to ascertain. Accordingly, if
any installment of the Minimum Monthly Rent or any other amount due under the
Lease is not received by Landlord as and when due, then, without any notice
to Tenant, Tenant
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shall pay to Landlord an amount equal to six percent (6%) of the past due
amount, which the parties agree represents a fair and reasonable estimate of
the costs incurred by Landlord as a result of the late payment by Tenant.
25. DEFAULT INTEREST. If Tenant fails to pay any amount due under this
Lease as and when due, that amount shall bear interest at the maximum rate
then allowable by law from the due date until paid.
26. WAIVER OF BREACH. Any express or implied waiver of a breach of any
term of this Lease shall not constitute a waiver of any further breach of the
same or other term of this Lease; and the acceptance of rent shall not
constitute a waiver of any breach of any term of this Lease, except as to the
payment of rent accepted.
27. ESTOPPEL CERTIFICATES. At any time, with at least fifteen (15)
days' prior notice by Landlord, Tenant shall execute, acknowledge, and deliver
to Landlord a certificate certifying:
a. the Commencement Date and the Term,
b. the amount of the Minimum Monthly Rent,
c. the dates to which rent and other charges have been paid,
d. that this Lease is unmodified and in full force or, if there
have been modifications, that this Lease is in full force, as modified, and
stating the date and nature of each modification,
e. that no notice has been received by Tenant of any default by
Tenant that has not been cured, except, if any exist, those defaults must be
specified in the certificate, and Tenant must certify that no event has
occurred that, but for the expiration of the applicable time period or the
giving of notice or both, would constitute an Event of Default under this
Lease,
f. that no default of Landlord is claimed by Tenant, except, if
any, those defaults must be specified in the certificate, and
g. other matters as may be reasonably requested by Landlord.
An estoppel certificate requested pursuant to this section may be relied
on by prospective purchasers, mortgagees, or beneficiaries under any deed of
trust on the Premises or any part of it.
28. ATTORNEY FEES. If any action at law or in equity is brought to
recover any rent or other sums under this Lease, or for or on account of any
breach of or to enforce or interpret any of the covenants, terms, or
conditions of this Lease, or for the recovery of the possession of the
Premises, the prevailing party shall be entitled to recover from the other
party as part of prevailing party's costs reasonable attorney fees, the
amount of which shall be fixed by the court and shall be made a part of any
judgment rendered.
29. HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance condition
occurs, unless Tenant is legally responsible therefor (in which case Tenant
shall make the investigation and remediation thereof required by applicable
law and this Lease shall continue in full force and effect, but subject to
Landlord's rights under this Xxxxxxxxx 00), Xxxxxxxx may, at Landlord's
option, either (i) investigate and remediate such Hazardous Substance
condition, if required, as
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soon as reasonably possible at Landlord's expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
investigate and remediate such condition exceeds twelve (12) times the then
monthly base rent or $50,0000, whichever is greater, give written notice to
Tenant within thirty (30) days after receipt by Landlord of knowledge of the
occurrence of such Hazardous Substance condition of Landlord's desire to
terminate this Lease as of the date sixty (60) days following the giving of
such notice. In the event Landlord elects to give such notice of Landlord's
intention to terminate this Lease, Tenant shall have the right within the
(10) days after the receipt of such notice to give written notice to Landlord
of Tenant's commitment to pay for the investigation and remediation of such
Hazardous Substance condition totally at Tenant's expense and without
reimbursement from Landlord except to the extent of an amount equal to twelve
(12) times the then monthly Base Rent or $50,000, whichever is greater.
Tenant shall provide Landlord with the funds required of Tenant or
satisfactory assurance thereof within thirty (30) days following Tenant's
said commitment. In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such investigation and remediation
as soon as reasonably possible and the required funds are available. If
Tenant does not give such notice and provide the required funds or assurance
thereof within the times specified above, this Lease shall terminate as of
the date specified in Landlord's notice of termination. If a Hazardous
Substance condition occurs for which Tenant is not legally responsible, there
shall be abatement of Tenant's obligations under this Lease for a period of
not to exceed twelve (12) months while Landlord remediates the condition.
30. SECURITY DEPOSIT. On execution of this Lease, Tenant shall deposit
with Landlord $5,395.00 as a security deposit for the performance by Tenant
of the provisions of this Lease. If Tenant is in default, Landlord can use
the security deposit, or any portion of it, to cure the default or to
compensate Landlord for all damage sustained by Landlord resulting from
Tenant's default. Tenant shall immediately on demand pay to Landlord a sum
equal to the portion of the security deposit expended or applied by Landlord
as provided in this paragraph so as to maintain the security deposit in the
sum initially deposited with Landlord. If Tenant is not in default at the
expiration or termination of this Lease, Landlord shall return the security
deposit to Tenant. Landlord's obligations with respect to the security
deposit are those of a debtor and not a trustee. Landlord can maintain the
security deposit separate and apart from Landlord's general funds or can
commingle the security deposit with Landlord's general and other funds.
Landlord shall not be required to pay Tenant interest on the security deposit.
31. WARRANTY OF AUTHORITY. The undersigned warrant and represent to
Landlord that they are duly authorized corporate officers of Tenant, and that
they are acting within the scope of their authority to bind Tenant to the
provisions in this Lease without any further action, approval or consent of
the Board of Directors of Tenant.
32. NOTICES. Any notice or other communication pursuant to this Lease
shall be in writing and shall be deemed to be properly given if delivered,
mailed, or sent by wire, facsimile transmission or other telegraphic
communication in the manner provided in this paragraph, to the following
persons:
Heritage Oaks Bank
000 00xx Xxxxxx
Xxxx Xxxxxx, XX
FAX: (000)000-0000
(000)000-0000 - phone
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EXHIBIT 99.1
Xxxxxxx X. Xxxxx
0 Xxxx Xxxx Xxxx
Xxx Xxxx Xxxxxx, XX 00000
(000) 000-0000 (work phone)
Either party may change the party's address for these purposes by
giving written notice of the change to the other party in the manner provided
in this section. If sent by mail, any notice, delivery, or other
communication shall be effective or deemed to have been given forty-eight
(48) hours after it has been deposited in the United States mail, duly
registered or certified, with postage prepaid, and addressed as set forth
above. Notices sent by wire, telegraph or facsimile transmission shall be
deemed received on the next business day after transmission. Facsimile
machines used for tax notice must generate a "Transmission Record" stating
the telephone number of the receiving fax, number of pages sent out, date and
time of transmission and indication of any transmission errors.
33. HEIRS AND SUCCESSORS. This Lease shall be binding on and shall
inure to the benefit of the heirs, executors, administrators, successors, and
assigns of Landlord and Tenant.
34. PARTIAL INVALIDITY. Should any provision of this Lease be held by
a court of competent jurisdiction to be either invalid or unenforceable, the
remaining provisions of this Lease shall remain in effect, unimpaired by the
holding.
35. ENTIRE AGREEMENT. This instrument constitutes the sole agreement
between Landlord and Tenant respecting the Premises, the leasing of the
Premises to Tenant, and the specified lease term, and correctly sets forth
the obligations of Landlord and Tenant. Any agreement or representations
respecting the Premises or their leasing by Landlord to Tenant not expressly
set forth in this instrument are void.
36. TIME OF ESSENCE. Time is of the essence in this Lease.
37. RENT. All monetary obligations of Tenant to Landlord under the
Lease, including but not limited to the Minimum Monthly Rent, tax
reimbursements and insurance reimbursements, shall be deemed rent.
38. AMENDMENTS. This Lease may be modified only in writing and only if
signed by the parties at the time of the modification.
39. SUBORDINATION.
a. This Lease shall be subordinate to any ground
lease,mortgage, deed of trust, or any other hypothecation for security now or
later placed upon the Premises and to any advances made on the security of it
or Landlord's interest in it, and to all renewals, modifications,
consolidations, replacements, and extensions of it. However, if any
mortgagee, trustee, or ground Landlord elects to have this Lease prior to the
lien of its mortgage or deed of trust or prior to its ground lease, and gives
notice of that to Tenant, this Lease shall be deemed prior to the mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or
subsequent to the date of the mortgage, deed of trust, or ground lease, or
the date of recording of it. If any mortgage or deed of trust to which this
Lease is subordinate is foreclosed or a deed in lieu of foreclosure is given
to the mortgagee or beneficiary, Tenant shall attorn to the purchaser at the
foreclosure sale or to the grantee under the deed in lieu of foreclosure. If
any ground lease to which this Lease is subordinate is terminated, Tenant
shall attorn to the ground lessor. Tenant agrees to execute any documents, in
form and substance reasonably acceptable to Tenant,
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required to for the subordination, to make this Lease prior to the lien of
any mortgage or deed of trust or ground lease, or to evidence the attornment.
b. If any mortgage or deed of trust to which this Lease is
subordinate is foreclosed or a deed in lieu of foreclosure is given to the
mortgagee or beneficiary, or if any ground lease to which this Lease is
subordinate is terminated, this Lease shall not be barred, terminated, cut
off, or foreclosed. Neither shall the rights and possession of Tenant under
this Lease be disturbed, if Tenant is not then in default in the payment of
rental and other sums due under this Lease or otherwise in default under the
terms of this Lease, and if Tenant attorns to the purchaser, grantee, or
ground lessor as provided in Section 38(a) or, if requested, enters into a
new lease for the balance of the term of this Lease on the same terms and
provisions in this Lease. Tenant's covenant under Section 38(a) to
subordinate this Lease to any ground lease, mortgage, deed of trust, or other
hypothecation later executed is conditioned on each senior instrument
containing the commitments specified in this subsection.
40. RIGHT OF FIRST REFUSAL. If Landlord determines to sell the
Premises, Landlord shall notify Tenant of the terms on which Landlord will be
willing to sell.
If Tenant, within ten (10) business days after receipt of
Landlord's notice, indicates in writing its agreement to purchase the
Premises on the terms stated in Landlord's notice, Landlord shall sell and
convey the Premises to Tenant on the terms stated in the notice. If Tenant
does not indicate its agreement within ten (10) business days, Landlord
thereafter shall have the right to sell and convey the Premises to a third
party on the same terms stated in the notice. If Landlord does not sell and
convey the Premises within one hundred eighty (180) days, any further
transaction shall be deemed a new determination by Landlord to sell and
convey the Premises and the provisions of this paragraph shall be applicable.
If Tenant purchases the Premises, this Lease shall terminate on
the date title vests in Tenant, and Landlord shall remit to Tenant all
prepaid and unearned rent.
Tenant's right of first refusal shall not apply to a transfer
between any of those persons who constitute Landlord and the blood relatives
of any of those persons, either outright or in trust, or to a legal entity
(i.e., partnership, corporation, trust, or like entity) when the majority
interest is owned by all or some of those persons who constitute Landlord.
41. MERGER. The voluntary or other surrender of this Lease by Tenant,
or a mutual cancellation of the Lease, or a termination by Landlord, shall
not work a merger, and shall, at the option of the Landlord, terminate all or
any existing subtenancies or may, at the option of Landlord, operate as an
assignment to a Landlord of any of the subtenancies.
42. LANDLORD'S ENTRY. Any time that Landlord is entitled to enter the
Premises under the terms of this Lease, such entry shall be on a minimum of
twenty-four (24) hours' prior notice. Landlord shall not maintain a key to
the Premises, except that during the last six (6) months of the Term or any
Extended Term of this Lease, Tenant shall allow prospective tenants or
purchasers, agents, contractors, consultants to inspect and have reasonable
access to the Premises to evaluate the Premises for rental or purchase on all
business days and one day per weekend between the hours of 8:00 a.m. and 6:00
p.m. If Tenant fails to provide such access, Tenant shall provided a key to
Landlord.
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43. GOVERNING LAW. This Lease shall be governed by and construed in
accordance with California law.
The parties have executed this Lease as of the date first above written.
TENANT: LANDLORD:
HERITAGE OAKS BANK
By: /s/ [ILLEGIBLE] /s/ Xxxxxxx X. Xxxxx
---------------------------- ------------------------------
President Xxxxxxx X. Xxxxx
By: /s/ [ILLEGIBLE]
----------------------------
Chief Financial Officer
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EXHIBIT "A"
Parcel A of Parcel Map No. 5195, in the City of Santa Xxxxx, County of
Santa Xxxxxxx, State of California, as per Map recorded in Book 17, Page 29
of Parcel Maps, in the Office of the County Recorder of said County; subject
to all matters shown of record.
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